Business acquisition review: what must be clear before signing?

1. Determine what is bought and who is a party

In a share transaction, ownership of the shares changes; the company generally remains the same contracting party. In an asset and liability transaction, the elements to be transferred must be specified. List the activities, assets, rights and obligations you intend to acquire. “Buying a business” does not itself identify the legal components included.

Record buyer and seller using their correct legal names. If a holding company owns the shares, that position matters for the contracts. If the acquiring bv is still to be incorporated, discuss when and for whom signatures are given. Distinguish the owner’s personal guarantees and obligations clearly from the legal entity’s agreements.

2. Have the letter of intent and confidentiality reviewed first

A document called a letter of intent may contain binding provisions, such as exclusivity, confidentiality or costs. Ask which parts describe only the investigation process and which create immediate obligations. State necessary reservations clearly. A buyer still needing financing and investigations must not unintentionally act as if the entire purchase is unconditional.

Agree what information is accessible, who sees it and permitted uses. Do not provide unlimited staff or customer information simply because an interested buyer asks. Arrange a practical data-room agreement and monitor versions. The seller also benefits from recording which information was available when and which questions were actually answered.

3. Organise targeted due diligence

KVK describes due diligence as checking previously provided information and risks. Translate the business’s characteristics into questions on key customers, financing, ownership, staff, claims and permits. Appoint one coordinator and align legal, financial and tax reviews. A large volume of documents does not replace answered questions.

Create a findings list with document, risk, missing information and proposed solution. Do not present uncertainty as an established defect or an unanswered issue as approved. Check when figures and contracts were updated too. The business can change between investigation and transfer; ask which new events require disclosure and which pre-completion checks are needed.

4. Examine contracts, security and dependencies

Find the largest customer and supplier contracts, premises and equipment leases, and financing. Contracts are not necessarily unaffected by a share transfer: a change of control may trigger notification duties or termination rights. Transfer of individual contracts may require consent and formal cooperation. KVK identifies this distinction as important to continuity.

Check ownership of machinery, software and trading name and existing pledges or other security rights. An asset on the premises is not automatically freely transferable. Record required releases or consent for each key element before transfer. Do not hide unclear personal sureties of the seller behind a general statement that the buyer assumes all debts.

5. Assess staff and employee participation separately

A transfer of activities may constitute a transfer of undertaking with preserved employee rights. This requires examining the actual organisation transferred, not just the asset/liability label. In a pure share transfer, the employer usually remains the same legal entity; there is no simple freedom to select staff again. Have the employment-law position specifically investigated.

Include employment contracts, sickness, collective agreements, pensions and possible claims. Determine whether and when a works council, unions or others must be informed or consulted. Official employee guidance highlights timely preparation. A commercial completion date should not be chosen as if these statutory steps could be filled in administratively afterwards.

6. Translate risks into terms and implementation

An identified risk requires a conscious choice: resolution before completion, price adjustment, specific warranty, indemnity or stopping the deal. Match wording, duration, notification method and limits to the actual risk. A general warranty that everything is correct does not automatically make a claim easy without a sound process. Discuss the financial means and possible security of the person who may later owe compensation.

Plan signing separately from actual completion if conditions intervene. List documents, payments, approvals and registrations needed on completion day. A share transaction requires appropriate notarial execution. Also check practical handover of keys, accounts and records. Ownership, access and payment timing should align.

7. Fictional example: profitable business with one essential contract

Suppose a buyer wants shares in a service provider. The reported profit looks attractive, but much turnover depends on one customer. That contract contains a change-of-control clause. Documentation on a pension arrangement is also missing. The price has already been discussed orally.

A useful approach identifies continuity and pension issues before unconditional signing. Consent, reservations and suitable contractual protection can then be discussed. This fictional example supplies neither a valuation nor guaranteed risk reduction. It shows why legal findings must remain connected to the purchase decision.

8. Checklist for your acquisition lawyer

First state your stage: exploratory discussion, letter of intent, investigations or planned completion. Disclose every commitment already accepted. Ask which decisions and conditions remain and who monitors fulfilment of each.

• Parties, group structure and intended share or asset transaction.
• Letter of intent, confidentiality and terms already discussed.
• Data room, questionnaire and findings with missing documents.
• Contracts, employees, security and required consents.
• Draft purchase agreement, financing and completion checklist with responsible people.